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British Airways to Raise Fares, Reduce Revenue Growth Target

August 1, 2008 By: Kirk Cassels

Citing fuel costs, a weak economy and a decrease in consumer confidence, British Airways (BA) announced it will reduce its revenue growth target from 4 percent to 3 percent and raise ticket prices to offset a planned 3 percent reduction in winter capacity, Reuters reports. The airline's first quarter profit dropped during what officials call the worst trading conditions they've ever experienced. The airline's goal remains that of "achieving a small profit in the current financial year" and a sustainable profit for the long-term.

"This is the worst trading environment the industry has ever faced and fares are likely to go up as we reduce some winter capacity and cope with unprecedented oil prices but we won't be grounding any aircraft," CEO Willie Walsh said during a conference call with reporters.

Walsh confirmed that BA has met with Spain's  Iberia Airlines to discuss a potential all-share merger but clarified that it was "too early to say what impact it will have on the business in terms of jobs."

In a move to counteract high fuel costs, the airline recently ordered six new Boeing 777-300ER aircraft, after revising its capital expenditure plans, for delivery in early 2010.

"They are 23 percent more fuel efficient than the Boeing 747-400 and give us additional flexibility in the long-haul fleet," said Walsh.


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